S&P cuts Stallion Oilfield to 5

Standard & Poor's said it revised its recovery rating on Stallion Oilfield Services Ltd.'s (D) senior unsecured debt to 5, indicating expectations for modest recovery in the event of a payment default, from 4.

The issue-level rating on this debt remains D, S&P noted.

Additionally, the agency said it maintained the recovery rating of 1 on the company's senior secured debt, indicating very high recovery in the event of a payment default. The issue-level rating on the senior secured debt remains D.

"Our recovery ratings reflect its view that Stallion's business model remains viable, following reorganization, albeit with reduced revenue and profitability prospects," said S&P credit analyst Kenneth Cox.

"We believe the recent default was primarily a result of high leverage and the severity of current downturn in natural gas prices. However, the agency said it believes it may take years for profitability to return to recent levels, following the expanded capacity built up in the oilfield services sector in recent years."

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